FC: More on FTC action against kids sites and COPPA

From: Declan McCullagh (declanat_private)
Date: Fri Apr 20 2001 - 09:54:54 PDT

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    From: "Samberg-Champion, Sasha" <schampion@warren-news.com>
    To: "'declanat_private'" <declanat_private>
    Subject: RE: FTC action against kids sites smacks of hypocrisy, by Lizard
    Date: Fri, 20 Apr 2001 11:55:08 -0400
    
    Declan,
    
    In fairness to the FTC, it appears to have held off for a year in filing
    formal complaints against these companies and others, and preferred to work
    things out informally.  Here's my story in today's Washington Internet
    Daily.
    
    -- Sasha
    
    Sasha Samberg-Champion
    Communications Daily, Washington Internet Daily
    (202) 872-9202 x 371
    FAX (202) 293-3435
    SChampion@warren-news.com
    
    	Privacy Advocates Call For Tougher COPPA Enforcement
    
    	As the Children's Online Privacy Protection Act (COPPA) reached its
    first anniversary, its leading advocates saw substantial progress in
    industry privacy standards, but some still complained of inadequate
    compliance by many companies.  They sought more enforcement by the FTC, and
    the agency obliged Thurs., releasing its first 3 settlements with alleged
    COPPA violators and promising further actions.
    
    	"We're encouraged by the progress we see," said Kathryn Montgomery,
    pres. of the Center for Media Education (CME), in a press call.  CME
    released a study that attempted to parallel the FTC's 1998 industry survey,
    which helped motivate Congress to pass COPPA.  "We found relatively good
    compliance with COPPA in just one year," said Jean Ann Fox, dir.-consumer
    protection at the Consumer Federation of America.  She said children's sites
    were improving their privacy protections "at a faster rate than surveys
    indicate is going on with regular Web sites," which have no such law
    governing them.  This year's study showed, for example, that only 19% of
    sites solicited postal addresses from children under 13, down from 49% in
    1998.  Whereas in 1998 fewer than a quarter of sites that collected data
    also posted a privacy policy, in 2001 76.3% did.  "The industry has gone to
    great lengths to come into compliance," said Lee Peeler, assoc.
    dir.-advertising practices in the FTC's Bureau of Consumer Protection.
    
    	However, the study also found that of 50 sites collecting enough
    information to require parental permission under COPPA, just 19 (38%)
    obtained that permission properly.  It showed that only 34% of sites linked
    to their privacy policies in a "clear and prominent" place on the home page,
    and many didn't appear to understand that links for e-mailing the sites
    counted as a data collection point.  CME also faulted several sites that
    made it too obvious for children that falsifying their ages as being above
    13 would allow them to enter a restricted area.  "The FTC needs to continue
    monitoring this law," Montgomery said.  "The industry obviously has more
    work to do as well."  The CME study is the 2nd in the last few weeks to find
    substantial noncompliance with COPPA, following one by the Annenberg Public
    Policy Center (WID March 29 p8).  "Where there's substantial noncompliance,
    we intend to take action," Peeler promised.  He said the FTC has "other
    matters under investigation" already.
    
    	Several sites have complained that the cost of COPPA compliance has
    driven them out of the children's market.  "There was a spectre of COPPA
    monetary policies coming down," said a spokesman for the Assn. for
    Competitive Technology, "and that led some folks, after consulting with
    lawyers, to modify their business behavior.  You had kid sites that went
    away."  However, Montgomery said her study's results showed "there are ways
    to customize... without having to collect personalized information."  She
    said COPPA "has been made kind of a scapegoat."  Frank Torres, legislative
    counsel for the Consumers Union, said some sites might have gone out of
    business because they had "a business model based on invading privacy
    without parents' knowing about it."  He said that's "not a model we want to
    be supporting.  The fact of the matter is, sites are complying with the law,
    and they are still in business."
    
    	"They're painting an unrealistically bleak picture," said children's
    Web site lawyer Parry Aftab of CME and its allies.  "The sites [in the
    study] are trying... They may not be right, but they're close."  Aftab, who
    supports COPPA, said "the whole climate has changed radically" in the last
    year:  "The sites have figured out that they're not allowed to collect
    information for the most part."  She said COPPA had proved to be "a very,
    very difficult law" to comply with, but "we care about the bottom line --
    protecting children on the Internet -- not finding violations."
    
    	Under the FTC's settlements, 3 sites will pay a total of $100,000 in
    civil penalties for collecting personally identifiable information (PII)
    from children without parental consent.  The settlements also require the
    sites to delete any PII still on their systems and link to the FTC's COPPA
    page.  On behalf of the FTC, the Justice Dept. had sued the companies --
    girlslife.com, bigmailbox.com and insidetheweb.com -- in U.S. Dist. Court,
    Alexandria, Va.  The FTC action will "let everyone know they're watching,"
    Aftab said.  She said the sites in question "clearly have to have been cases
    where the sites didn't want to work with the FTC."
    
    	Although the cases were the first released by the FTC, Aftab and her
    legal partner Nancy Savitt said the agency had been making a difference
    behind the scenes.  FTC staffers "don't want to find sites in violation,
    they want to get them into compliance," Aftab said.  "Instead of bringing
    enforcement actions, they've done what's been a pain for them -- they've
    picked up a phone and helped [the sites] get there.  It's really wonderful."
    Savitt said the FTC had "worked with dozens" of companies on getting into
    compliance.
    
    	Meanwhile, the FTC also approved its second safe harbor for COPPA
    compliance.  The Entertainment Software Rating Board (ESRB) joined the
    Better Business Bureaus' Children's Advertising Review Unit (WID Feb 2 p2)
    in having the right to certify sites as COPPA-compliant.  ESRB said it
    already had 20 companies certified or in the process of being certified,
    including many of the major videogame companies such as Sega and Nintendo.
    -- {{Sasha Samberg-Champion}}
    
    -----Original Message-----
    From: Declan McCullagh [mailto:declanat_private]
    Sent: Friday, April 20, 2001 11:27 AM
    To: politechat_private
    Subject: FC: FTC action against kids sites smacks of hypocrisy, by
    Lizard
    
    
    FTC press release and news coverage:
    http://www.ftc.gov/opa/2001/04/girlslife.htm
    http://www.internetworld.com/news/archive/04202001c.jsp
    
    Background:
    http://www.politechbot.com/p-01732.html
    http://www.politechbot.com/cgi-bin/politech.cgi?name=coppa
    
    -Declan
    
    **********
    
    http://www.cluebot.com/article.pl?sid=01/04/20/038208&mode=thread
    
        COPPA Claims More Victims
    
        posted by lizard on Thursday April 19, @09:58PM
        from the who-needs-the-CDA dept.
    
    [...]
    
    
    
    
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